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September 22, 2012

13Ds are filed with the Securities and Exchange Commission within 10 days of an entity's attaining a greater than 5% position in any class of a company's securities. Subsequent changes in holdings or intentions must be reported in amended filings. This material has been extracted from filings released by the SEC from Sept. 13 through Sept. 19, 2012. Source: InsiderScore.com

Activist Filings

On Sept. 13, hedge fund Clinton Group sent a letter to the board reiterating its goal of voting out four of five directors and replacing them with a slate of candidates proposed by Clinton.

The hedge fund also said its nominees have "already begun to function as a group, meeting with industry experts and analyzing alternatives for creating stockholder value." The fund also requested that its nominees "be brought into discussions with the Company's investment bankers and executive recruiters." Clinton added that its nominees have been contacted by "a number of qualified executives" who are interested in Wet Seal's vacant CEO position.

Additionally, on Sept. 17 Clinton wrote a letter to Wet Seal shareholders reiterating its position and urging them to vote for its slate of director nominees.

Clinton said it owns 6,297,606 shares (7% of the voting shares total) after buying 439,806 in the period from Sept. 6 to Sept. 13 at prices ranging from $2.98 to $3.18 each. Clinton also disclosed selling 145,000 from Sept. 6 through Sept. 10 for $3.02 to $3.25 per share.

Discovery Equity Partners disclosed that it owns 1,826,900 shares (5.2%) after it bought 234,896 shares from Aug. 6 through Sept. 13 at prices from $4.49 to $4.99 per share. Discovery said it acquired the shares because it believes "that the trading prices of the common stock do not adequately reflect the potential value of the Company's underlying business and assets." The investment group added that it has had discussions with management regarding Gain's "operations, strategic direction, and valuation in the public market" and reiterated its "desire for the Company to pursue all appropriate strategic and financial alternatives to increase shareholder value."

Atlantic Investment Management disclosed that it owns 3,917,724 shares (5.1%) after it bought 494,441 shares from July 19 through Sept. 13 at prices from $44.13 to $49.48 apiece. Atlantic also disclosed selling 4,039 shares on Sept. 4 at $46.98 each.

Atlantic said it will "continue its active discussions" with management, regarding steps that might be taken to maximize shareholder value, adding that it "may hold discussions with other parties who might engage in shareholder-value-enhancing activities for the benefit of all of [Rockwood's] shareholders."

Increases in Holdings

Gamco Investors increased its holdings of FSI, a maker of microelectronics fabrication equipment, to 3,367,192 shares (8.6%) after it bought 472,481 shares from Sept. 7 through Sept. 13 at prices of $6.17 to $6.18 apiece.

Gamco decreased its holdings in the pop landmark hotel and convention-center owner to 5,929,072 shares (13.2%) after it sold 950,638 from July 13 through Sept. 12 at prices ranging from $35.25 to $41.24. Gamco also said it bought 53,900 shares in the period from July 16 through Sept. 11 for $35.41 to $40.68 each.

Gamco disclosed sending a letter to Gaylord on Sept. 12 announcing its intention to vote against Gaylord's proposed conversion to a real-estate investment trust structure at a Sept. 25 special meeting of stockholders.

Discovery Equity Partners decreased its holdings in the developer of Web and Cloud testing and monitoring services to 806,352 shares (4.5%) by selling 241,821 in the span from Aug. 6 through Sept. 12 at prices from $12.95 to $14.11 apiece.

Behind the Scenes: Starboard is one of the most prolific activist investors. In this case, it sees a short-term and a long-term activist opportunity. Starboard believes Office Depot's Mexican joint venture has substantial hidden value, and that ODP could sell its interest to its venture partner for $500 to $900 million. The long-term opportunity would be to cut costs and improve margins. While ODP is already in the midst of restructuring, Starboard would like a more comprehensive and urgent restructuring. If Starboard has to resort to a proxy fight, ODP's unique preferred stock, which provides that its 20% convertible common-stock interest must support management, will create an obstacle for Starboard by essentially giving the board a 20% head start. Moreover, the preferred stock pays an annual cash dividend of 10% and has a conversion price of $5 per share. So, preferred- and common-stock holders may not have aligned interests.

-- Kenneth Squire

The 13D Activist Fund, a mutual fund runby an affiliate of the author and not connected to Barron's, has no position in the securities mentioned here. In addition, the author publishes and sells 13D research reports, whose buyers may include representatives of participants in, and targets of, shareholder activism.